MarketIntellibits
TM                  
April 15,  2006
Volume II   Issue 7

Whoever Owns the Customer Wins
by Jack Miller

Yesterday, I went to the supermarket to buy groceries for the week. As
usual, I was frustrated because the store was out of several items I needed,
and I had to decide whether to go to another store or buy different items.

I’m the customer. But who “owns” my loyalty? Whoever owns the customer
wins.

My purchases included a quart of 2% milk from a local dairy, a “FridgeMate”
pack of 12 cans of Pepsi, and pasta.

But what if the store is out of Pepsi, will I buy Coke instead? If the store is
out of Pepsi several times, will I switch all my business to another store? In
this case, they only had the pasta I wanted in the store brand. I refused to be
“forced” to buy the store brand, so I went to a second store for the pasta and
a few other items.  But I’ll be back to my regular store next week.

The store certainly hopes that I am loyal to them, but I wonder if they realize
that the main reason I remain loyal is the bank. The bank in the store is often
open when the regular bank is closed, especially on Saturday afternoons,
and if it were not in that store, I’d probably try another store.

This little scenario illustrates an important issue. I’m sure we can all relate to
the supermarket situation, but since most subscribers to this newsletter are
in paper or printing, I’ll relate the balance of this article to that business.

A mill sells printing paper to a merchant. The printer buys the paper and
sells the printing to the end user, but the merchant rep also has a
relationship with the end user who specifies the brand of  paper.   

Who “owns” the customer? To answer this, you need to know who exerts
the most influence in the selection of the brand of paper.

A few years ago when I was in mill sales, I had a spirited conversation with a
merchant branch manager about this very topic. He said his goal was to
make sure the customer was loyal to the merchant house because of its
service: customer service people, warehousing, trucks for delivery, etc. I
asked, “What happens if one of your reps leaves? Do you keep the business
or does the rep keep the business?” He said that it doesn’t happen very
often, and acknowledged that it is a struggle, but he felt that the house
would keep the business more often than not. I then observed that the mill
wants to develop brand loyalty, and this can be beneficial to the merchant
house that supports the mill brand. We didn’t say it, but I’m sure we both
understood that it really is a three way contest between merchant house,
merchant rep, and mill to determine “who owns the customer.”

Most sales people will say it’s a people business or that they get the
business because of relationships. This used to mean lunches, and golf
games. Now it might include those things but it really means reliability,
service, and problem solving.

The merchant rep may be loyal to the mill because of his or her relationship
with a mill sales rep or customer service rep who is a reliable problem
solver.  Similarly, the printer may be loyal to the merchant rep for similar
reasons.

It all comes down to what the customer values:  it’s always about price,
quality and service, of course, but not all customers value those things the
same way, nor do they all define them the same way.

If someone says “price” is most important, do they mean “lowest price”? In
that case, no one owns the customer, but if they mean “competitive price,”
then quality and service can make the difference.

Is “service” most important? What is it about service? Problem solving?
Quick delivery? Reliability? It might be any of a dozen things.

Is it “quality”? What does quality mean? Is it trouble free performance on
press or is it the quality of the printed image? Or maybe it’s simply a
perception based on the appearance of the paper before it’s printed.

In reality, though, most of the time all the players are inclined to feel that
they “own” the customer. They can’t all be right.  So what you think you
know about why you are winning or losing business may simply be wrong.

Do you know who owns the customer and why? This is important to make
sure you don’t lose customers as well as to gain new ones. Do you have an
effective CRM program? Do you do market research to answer these
questions?  Perhaps you should.  I’ve said it before: inevitably you will find
that some of the conventional wisdom is wrong.

Pira can help. Call Jack Miller at 203 925 0326 or email
jack.miller@market-
intell.com.




About Jack Miller                                       Email Jack Miller

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